Correlation Between Philex Mining and Ayala Land

Can any of the company-specific risk be diversified away by investing in both Philex Mining and Ayala Land at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Philex Mining and Ayala Land into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Philex Mining Corp and Ayala Land, you can compare the effects of market volatilities on Philex Mining and Ayala Land and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Philex Mining with a short position of Ayala Land. Check out your portfolio center. Please also check ongoing floating volatility patterns of Philex Mining and Ayala Land.

Diversification Opportunities for Philex Mining and Ayala Land

0.5

Correlation Coefficient

Philex Mining  Ayala Land

Very weak diversification

The 3 months correlation between Philex and Ayala is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding Philex Mining Corp and Ayala Land in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Ayala Land and Philex Mining is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Philex Mining Corp are associated (or correlated) with Ayala Land. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Ayala Land has no effect on the direction of Philex Mining i.e., Philex Mining and Ayala Land go up and down completely randomly.

Pair Corralation between Philex Mining and Ayala Land

Assuming the 90 days trading horizon Philex Mining Corp is expected to under-perform the Ayala Land. But the stock apears to be less risky and, when comparing its historical volatility, Philex Mining Corp is 1.16 times less risky than Ayala Land. The stock trades about -0.26 of its potential returns per unit of risk. The Ayala Land is currently generating about -0.21 of returns per unit of risk over similar time horizon. If you would invest  3,271  in Ayala Land on September 5, 2024 and sell it today you would lose (356.00) from holding Ayala Land or give up 10.88% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

Philex Mining Corp  vs.  Ayala Land

Philex Mining Corp

Risk-Adjusted Performance

1 of 100

Very Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Philex Mining Corp are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. In spite of rather sound basic indicators, Philex Mining is not utilizing all of its potentials. The latest stock price tumult, may contribute to shorter-term losses for the shareholders.

Ayala Land

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Ayala Land has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of unsteady performance in the last few months, the Stock's technical and fundamental indicators remain rather sound which may send shares a bit higher in January 2025. The latest tumult may also be a sign of longer-term up-swing for the firm shareholders.

Pair Trading with Philex Mining and Ayala Land

The main advantage of trading using opposite Philex Mining and Ayala Land positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Philex Mining position performs unexpectedly, Ayala Land can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Ayala Land will offset losses from the drop in Ayala Land's long position.

The idea behind Philex Mining Corp and Ayala Land pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.